Cramer's Mad Money - What Does Big Money Know? (3/27/09)

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday March 27.

What Does Big Money Know?

While Big Money advocates a buy and hold strategy, Cramer thinks this approach is lazy and will not make money. In spite of what his critics say, Cramer thinks he has been spot on with many of his calls: he told viewers to sell 20% of their portfolio when the Dow was at 11,000 last September, he suggested storing up cash a month later and Cramer made an enthusiastic plea to buy a week before the Dow surged 500 points on March 23. Cramer suggested taking profits on the recent rally and to continue following his advice on how to play the ups and downs of the market.

Silicon Laboratories (SLAB)

Until a few weeks ago, semiconductors were losers. The recent news of dwindling inventories has sent these stocks up on increasing demand from tech giants like Apple, Nokia and Cisco. Cramer has already recommended Taiwan Semiconductor and he would look at Silicon Laboratories, a company that makes chips for global positioning systems, phones, televisions and voice-over-internet devices. The company focuses on concentrating a company's many moving parts into a single semiconductor. Silicon Labs produces cheaper, energy-saving devices which are in demand. Silicon Labs has done fine even in the bear market; gross margins were 61% for the fourth quarter even though revenues were down 12%. It has also made job cuts where necessary and has eliminated pay raises. Cramer reminded viewers this is a speculative stock, and would wait for it to pull back from $27 to $25 before buying. The multiple is 21, but has traded up to 30 times earnings. Cramer would hold this stock until it reports earnings and then take profits.

Cramer's Outrage: Where Were They? AIG (AIG)

In the wake of the furor over AIG executive bonuses, Cramer wants to know where was Congress the past 8 years? During that time, there were tax cuts for the rich, unabashed and unregulated short selling, and huge payraises for executives. Now that for TARP recipients, there is a proposed 90% tax levied on bonuses for executives paid over $250,000, the wrath of the public is partially satiated. But where was the anger before the fall? While there is little point in crying over the past, Cramer calls for an end to the class war.

Clorox (CLX)

Cramer sees Clorox as a solid counter-trend play as Big Money is buying up more exciting stocks. However, Cramer thinks Clorox will be back because its winning brands such as Glad trash bags, Hidden Valley salad dressings and, well, Clorox are facing less competition from private label brands as consumers are feeling more confident. The company had to raise prices to deal with higher commodity costs, and now that commodities have declined, the company may not rush to lower prices again. Clorox currently trades at 13% times earnings, a huge discount to its five year average of 19%; Cramer sees the stock going up 44% to $77. The company expects an 8.6% dividend increase to 3.8%.

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Comments

[R. Ennis:]

Do me a favor and post an article about how many times Cramer is wrong. Oh yeah, not enough ink....

Mar 28 09:05 PM

[ILL PA.:]

I THINK THAT CRAMER === SHOULD TALK ABOUT = ALCATEL/LUCENT == ALU == AS A GOOD CHIP MAKER.
ALU === ARE JUST AS BIG OR BIGGER THEN
(SLAB).
SPARKY114 ======= THE STREET. COM

Mar 28 09:06 PM

[mrtaxx:]

Cramer has a loud mouth, is many times wrong and is rude, just you check his info and stock calls against what others claim are his info and stock calls you will find out that Cramer is not always telling the truth about his positive statisticks and statements.. He even may diseminate his stock calls before his TV show according to CNBC as CNBC has a disclaimer statement. When is the SEC of for that matter CNBC going to get Cramer off the air for his distruction of peoples money. The most recent commentary about how bad, wrong and abusive Cramer is can be seen on the internet in an iterview with Jon Stewart.

Mar 29 05:42 AM

[HATEFEEBAY:]

I saw him say buy BAC 2 weeks ago @ $6 a share, then 3-4 days later he said it was a dog and to sell it. I was in about $300K and was like WTF when I heard him change direction, but held and sold at $7.14 after buying around $5.5-$6 a share :-) Nobody is perfect and I enjoy watching him, he is quite bright, but each and everyone of us makes a ton of bad calls. The thing is to try and br right over 50% of the time-ha.

Mar 29 01:52 PM

[HATEFEEBAY:]

I meant to say AA, Alcoa on that post above-sorry!

Mar 29 01:52 PM

[ksmithdc:]

Interesting read, thanks.

Mar 29 02:44 PM